Facebook says goodbye to Facebook Credits virtual cash

Facebook said Tuesday that it is phasing out Facebook Credits, which once had the potential to become the social network’s own universal currency.

But Facebook is keeping the payment processing system that brings the company a 30 percent cut of the revenue generated by transactions within apps and games.

Instead, developers can use their own in-app virtual currencies, such as Farm Cash in FarmVille, that are based on the real-world values of local country currencies, such the U.S. dollar or the Japanese yen.

More importantly, app developers will soon be able to charge subscription fees, Prashant Fuloria, Facebook product management director, announced in a company blog for developers. Subscriptions could become an easy, ongoing source of revenue.

In a sense, Facebook is backing away from a plan launched in 2009 to make Facebook Credits the virtual cash used throughout the social network. Facebook required social game developers like Zynga to use Facebook Credits as a payment platform and even tried selling Facebook Credit gift cards on the shelves of stores like Target and Walmart.

Meanwhile, analysts saw the potential for Facebook Credits to one day become a universal online currency that could be used across all geographic borders.

Facebook Credits was part of the social network’s payment system that generated about 18 percent of the company’s revenue in the first quarter. Facebook receives a 30 percent cut per transaction – and that part of the system isn’t going away because it will still continue to process virtual payments.

What’s changing is Facebook is phasing out the Facebook Credits brand in recognition that app developers still preferred to create their own virtual currencies. That reduced “the need for a platform-wide virtual currency,” Fuloria wrote.

So the company is converting existing Facebook Credit balances to their equivalent values within the individual games and apps. And the new system is being change to support local currencies, such as the U.S. dollar, the British pound and the Japanese yen.

“We hope to simplify the purchase experience, give you more flexibility and make it easier to reach a global audience of Facebook users who want a way to pay for your apps and games in their local currency,” Fuloria said. “With local pricing, you will be able to set more granular and consistent prices for non-US users and price the same item differently on a market-by-market basis.”